Familiar Feeling of Well-guarded Optimism with Farm Bill Prospects

A look at the differences the two chambers must overcome.

The last few weeks of November saw great promise on Farm Bill passage fade into familiar skepticism, as issues related to both policy and politics continued to impede progress of the conference committee. House Republican leadership had set a deadline of Dec. 13 for Farm Bill conferees to bring a conference- negotiated bill to the House floor, a deadline that seemed all but out of reach when conference committee leaders halted their negotiations before the Thanksgiving break without agreement on a framework for final legislation.

Conference committee leaders convened by phone during that break, however, and Senate Agriculture Committee Chairwoman Debbie Stabenow (D-MI) and Ranking Member Thad Cochran (R-MS) returned to Washington early to be present for Farm Bill discussions. Likewise, staff negotiations were ongoing. In the weeks that followed, the “Big Four” – Stabenow, Cochran and their House Agriculture Committee counterparts, Chairman Frank Lucas (R-OK) and Ranking Member Collin Peterson (D-MN) – continued to meet and work to close the gap on differences that remained outstanding.

The impediments to agreement were familiar topics: most notably the commodities title and proposed new farm programs, as well as the level of cuts to the Supplemental Nutrition Assistance Program (SNAP). The former mainly concerns disagreement over whether to tie payments in new programs to historical base acres, which is the Senate position, or planted acres, which the House favors. Likewise, regarding SNAP, there is disagreement over how and whether to treat a recent lapse in SNAP benefits in the calculated savings amounts.

Base acres vs. planted acres

Both the Senate and House Farm Bill proposals would eliminate direct payments and divert the savings into new programs. The House bill would establish the Revenue Loss Coverage (RLC) program and the Price Loss Coverage (PLC) program, the latter of which would set target prices for certain commodities. Farmers of covered crops must choose one program or the other. The PLC program would pay farmers the difference between the market price and the statutorily determined target price, when the former falls below the latter. The amount of payments a farmer receives would be calculated by multiplying that price differential by the number of acres on which the
farmer planted the crop.

The Senate bill would also establish new revenue-based and price-based programs, called the Agriculture Risk Coverage (ARC) program and the Adverse Market Payment (AMP) program, respectively. AMP would do much the same thing as PLC, with a few key differences that are the source of the contention. The reference price in the AMP program would be set at 55% of a five-year Olympic moving average of prices, after removing the highest and lowest values in that time span. Rice and peanuts, which would have fixed reference prices, are the only exceptions. Payments would be calculated by multiplying the price differential by the number of “base” acres, which is a unique number of acres for each farm, determined by acreage planted on the farm to covered commodities in previous years.

The argument against the House PLC program is that farmers would have incentive to plant for the target price, not the market price, if market prices fall below the statutory threshold, which is always a possibility. Commodity groups like the American Soybean Association (ASA), the National Corn Growers Association (NCGA) and the U.S. Canola Association, the latter three of which are all representative of growers of program crops, lined up in opposition to the PLC program. ASA, NCGA and the U.S. Canola Association went so far as to say they would prefer a two-year extension to a policy that includes payments tied to planted acres.

Some commodity organizations, including those aforementioned, have floated a proposal to bridge the divide over base acres vs. planted acres. The compromise proposal would base payments on a moving average of planted acres for the previous five years, excluding the current payment year. The idea is that this would keep farmers from “building a base” simply in order to receive additional payments and yet would keep the amount of acres for which a farmer receives payment more current. House Agriculture Committee Chairman Lucas expressed initial skepticism to the proposal, and it remains to be seen whether the compromise will gain any traction as conference committee leaders continue to negotiate the issue.

SNAP

Since the beginning of negotiations over the Farm Bill in each chamber, the level of cuts to the SNAP program has been contentious. That the issue remains thorny during conference negotiations comes as no surprise. The issue was made more complicated in November, however, with the expiration of an increase in benefits to SNAP recipients that dates back to the American Recovery and Reinvestment Act — also known as the economic stimulus package — which passed in 2009, shortly after President Barack Obama took office. After the sunset date to the increase was moved up several times, the expiration took place on Nov. 1, 2013, totaling $11 billion over several years.

Chairwoman Stabenow argued such savings should be figured into the $40 billion in cuts that the House proposes, rather than added to the total. Her position on the issue was that the $11 billion in automatic cuts, plus the Senate’s proposed $4 billion in cuts, totaling $15 billion altogether, is a much more reasonable figure and closer to the level of cuts that a final bill might realistically make.

Tension continues as well over whether to alter categorical eligibility for SNAP recipients, something that Chairwoman Stabenow favored keeping in order to give states greater flexibility, but that has been targeted by some House Republicans as a key area of reform in order to reduce the amount of SNAP expenditures.

Will they or won’t they?

The all too familiar guessing game of trying to determine if a five-year Farm Bill will pass before the next deadline was in full swing up until around mid-December, when it became clear there would be no new Farm Bill before the end of 2013. At the time of this writing, the House passed yet another short-term extension of the current Farm Bill, just prior to adjourning for the year on Dec. 13. The bill would extend the Farm Bill through Jan. 31, 2014. Senate Majority Leader Harry Reid (D-NV) was insistent, though, that the Senate would pass no such extension.

The next approaching “deadline” for farm programs is technically Jan. 1, 2014, when current law for some dairy programs expires and 1949 agricultural law goes into effect, at which point the U.S. Department of Agriculture is required by law to make purchases of certain dairy products, thereby raising prices for consumers. Last year, this was referred to as the “dairy cliff.” The timeline for implementation of this policy, however, is determined by the secretary of agriculture. Some suggest the secretary could take weeks, if not months, to implement the policy changes, and thus a huge market disruption could be avoided. This could also be helped if lawmakers are able to reach an agreement and pass a Farm Bill by Jan. 15, which is when the current continuing resolution to fund the government expires. What this means is that lawmakers could really do without an extension and simply return after the holiday and pass a bill in January. Sen. Stabenow made remarks in support of Sen. Reid’s opposition to voting on an extension, undoubtedly with this factor in mind.

Hope springs eternal with aggies. There is a sense of serious fatigue that has set in for many lawmakers and stakeholders alike with the difficulties experienced over the last year and a half to pass legislation that has historically been bipartisan. These factors lend confidence to those involved that an agreement will be reached and a bill will be passed early in 2014, perhaps by the end of January, although such optimism is well guarded.